Fortunately, there is another option that is definitely worth looking into. The CHDK Wiki offers an alternative to standard Canon firmware, that enables saving images in RAW format as well as a number of other features not included, such as auto-exposure bracketing and a live histogram. A range of Canon Powershot and Ixus/SD compacts are supported, making CHDK a good solution for the budget-conscious photographer.
From the CHDK Wiki site:
CHDK is a firmware enhancement that operates on a number of Canon Cameras. CHDK gets loaded into your camera's memory upon bootup (either manually or automatically). It provides additional functionality beyond that currently provided by the native camera firmware.I recently purchased the Canon Powershot A720 IS and installed the CHDK firmware. It does not replace the original Canon firmware, but loads from the SD card and can be removed at any time, so my warranty is safe. Installing the firmware was relatively straight-forward and using RawTherapee (free) processing software, I've since been able to reap the benefits of the ability to shoot in RAW.
What's so great about RAW? Here is an original photo taken in RAW using a Canon 350D SLR with 17-85mm IS lens:
Compared with the adjusted photo using Capture One RAW processing software:







